HDFC to sell four major troubled accounts ahead of merger

In an attempt to clean up its books ahead of the announced merger with its banking subsidiary, Ltd is in the final stages of selling four major troubled accounts, including that of promoted Subhash Chandra, to Assets Care and Reconstruction Enterprise (ACRE), two people familiar with the talks told ET.

Embittered loan buyer ACRE has made a firm offer of ₹270 crore to acquire HDFC Mortgage Financier’s ₹577 crore portfolio of the four corporate accounts, the people quoted above have said. His bid equates to a 47% takeover for India’s biggest lender.

BSE-listed Siti Networks is the largest of the four accounts in this portfolio, worth ₹198.5 crore. The other three accounts are those of

, with a principal loan of ₹125 crore, Hotel Horizon at ₹163 crore and Sterling Urban Development at ₹90 crore. These four accounts are already fully provisioned in HDFC’s books, says a third person familiar with the matter.

Swiss Challenge Auction Process

Backed by Ares SSG Capital, special situation fund ACRE offered to prepay Rs 270 crore for the four accounts. The offer triggered a Swiss Challenge auction in which ACRE will have the first right to match any counter-offer received by HDFC for the distressed loan portfolio.

Potential bidders have until June 24 evening to submit expressions of interest, according to a notice published by HDFC. He said any counter-offer will have to be marked up by 10% over the base price of Rs 270 crore. Thus, the counter-offer must be Rs 297 crore or more.

HDFC and ACRE did not respond to ET’s questions.

Siti Networks, a digital cable television service provider formerly known as Wire and Wireless (India) Ltd, and

are both attractive accounts, according to one of the people quoted above. MEP is in road construction and toll collection.

HDFC has a gross loan book of Rs 5.68 lakh crore, of which Rs 1.30 lakh crore is a corporate loan book. Its gross non-performing loans stood at Rs 10,742 crore.